McKechnie sells products division

McKechnie is set to announce the £70m sale of its consumer products division `within weeks’ after receiving several expressions of interest. The company identified the division as a non-core activity in March. It wants to use the proceeds from the sale to expand its highly-engineered parts businesses. Finance director Stuart Moberley said two buyers were […]

McKechnie is set to announce the £70m sale of its consumer products division `within weeks’ after receiving several expressions of interest.

The company identified the division as a non-core activity in March. It wants to use the proceeds from the sale to expand its highly-engineered parts businesses.

Finance director Stuart Moberley said two buyers were interested in the whole division but expressions of interest from others had been concerned with buying parts of the operation. `We expect a sale within a few weeks,’ he added.

At £70m, the disposal would give McKechnie a war chest of some £150m for acquisitions in either its specialist products or engineered plastics division.

In recent weeks the company has been linked to distribution and fasteners group Lilleshall, which announced a bid approach last month. Other companies have also been tied to Lilleshall, including high-tech fasteners company Trifast and Midland industrial group Haden McLellan.

Shares in McKechnie climbed sharply after the group reported pre-tax profits for the year to the end of July of £59m, up from £53.9m last year.

The improvement in performance came despite a tough market, yet McKechnie managed to raise margins and reward shareholders with a higher dividend, up from 20.8p to 21.4p.

Underlying profits slipped slightly from £62.2m to £60.1m on lower sales. But Moberley said the quality of earnings had improved after offloading the company’s Australasian businesses and margins had gone up from 10.6% to 12.2 %.